An Analysis of the Top 300 Western Brands in China by Bomoda
Five years ago the luxury fashion market in China had around an 8% global market share. Today that global market share stands at 30%. China is now the largest luxury market in the world.
The market for luxury goods is growing very quickly relative to virtually anywhere else in the world. Chinese consumers who are entering this market are brand new. They are roughly two decades younger than their western counterparts.
The average Chinese luxury consumer is in their late 20s and early 30s. They are digitally savvy, affluent and already have a feeling about many well-known brands.
"Even if a brand does not think it is in China, it is. And the costs of ignoring the Chinese market ripple across the globe."
Bomoda is a membership-based, digital community. Their raison d'être is to make China “simple, clear and profitable for the world’s best brands”. Headquartered in New York, Bomoda publishes directly from the world’s leading fashion capitals.
The company sends newsletters on a regular basis, which generates most traffic to Bomoda’s website. At the end of 2012 the total number of Bomoda users was 40,000. By the end of 2013 that number stood at 250,000.
Obviously Bomoda are doing something right. In September of this year they published Into China: 2014 Bomoda Brand Index. This report has attempted to make sense of the Chinese market for anyone who wants to understand it.
“Companies often make investments that are too small or based on bad assumptions. Unrealistic expectations at the executive or board level often compound these challenges.”
2014 Bomoda Brand Index
The 2014 Bomoda Brand Index is an analysis of 300 prestige brands and how they perform in the Chinese market. Bomoda have assessed three areas of performance:
- Brand awareness
- Brand engagement
- Consumer experience
As the report makes clear from the start, the focus is on Western brands performance in China, “specifically those headquartered in Europe, North America and Australia”.
“As China emerges, China changes. Even as brands look to achieve a functional command of the market, the dynamics shift.”
So, what are the 10 most popular Western brands in China? According to Bomoda’s analysis they are:
There are in fact seven categories that Bomoda have chosen to assess the brands. In the report the brands are given a score in their own category. They are then put in overall order from one to 300. The seven categories are:
- Luxury – Chanel, Dior, Gucci
- Accessible luxury – Burberry, Coach
- High Street – Adidas, Nike, Converse, Zara
- Beauty & cosmetics – Lancôme
- Jewelry, watches & accessories
- Multi-brand retailers
The top 10 brands in China according to Bomoda’s index are from four of these categories, with luxury brands, accessible luxury brands and High Street brands dominating the list.
The British luxury fashion house Burberry is the top Western brand in China according Bomoda’s 2014 Brand Index. How has it got to this position? As the report states:
“Burberry is the #1 brand overall on our list for good reason; it leverages many channels and has a consistent voice and engaging content. At the bottom of the funnel, it converts the customer via a fully localized website and Tmall partnership.”
But what does ‘leverage many channels’ mean exactly?
Bomoda have used a varied mix of data to compile their Brand Index. The data is collected from a number of sources. This helps to build a comprehensive analysis to see which brands are doing best.
There are in fact six touch points they have used to gather their data:
- Chinese social media
- Search engines
- PR/ Key Opinion Leaders (KOL)
For me, the point about social media is very pertinent as this area also fits into KOL, mobile and e-commerce.
“Brands need more than Weibo and WeChat. Secondary channels such as Dianping, Douban, Meilishuo, Toutiao and even Instagram provide critical, targeted reach to over 500 million Chinese consumers.”
The report concludes that brands that enjoy the greatest success in China have the highest alignment with these five principles:
- They build for the Chinese consumer journey
- They localize
- They price competitively
- They develop authentic brand advocates
- They embrace mobile commerce
If a brand wants to be successful in China they must put these five insights into practice.
“As more Chinese consumers encounter Western brands, first impressions mean everything. The market is dynamic. But companies that best engage consumers today will emerge on the fast track with the world’s biggest market for decades to come.”
Chinese luxury consumers actually buy more abroad than they buy at home. Most luxury brands focus on the domestic market when in fact the Chinese market is about 60% outside of China.
“Savvy brands understand that China’s ‘2%’ domestic growth is misleading; when international purchases are considered, that number is significantly higher as China’s spend abroad is 66% of total outlays.”
What this Brand Index has done is help to lead brands that want to enter the Chinese market in the right direction. Many decisions about moving into China are based on outdated information and poor assumptions.
The Chinese consumer in general is very savvy and research online a lot before making purchase decisions. They use m-commerce and expect an optimized mobile experience.
This report by Bomoda has looked at some of the best brands in the world and used their experiences to inform any brand that is thinking about moving into China how best to make the experience positive.
To see a copy of the report in full go to the Bomoda Group website.Image source: www.cesanamedia.com